Shares of SunOpta Inc. popped 26 percent on Thursday after the organic food and beverage manufacturing giant released preliminary financial guidance for the first quarter ending March 28.
The Toronto-based company (NASDAQ:STKL) said it is attributing between $5 -$10 million of first quarter revenue growth, and an adjusted EBITDA loss of between $500,000 and $1.5 million, to the impact of the Covid-19 pandemic.
SunOpta also said the positive margin impact of the revenue growth is being more than offset by a $2.5 million unrealized loss on Mexican inventory revaluation as a result of the devaluation of the peso.
The new unaudited guidance estimate is based on January and February actuals combined with a forecast for March, the company said. Full first quarter financial results will be released in in early May. Full-year results were released late last month.
SunOpta said the guidance is meant to update shareholders on its performance and to disseminate non-public information to the market in order “to facilitate the accurate pricing of up to $60 million of preferred shares financing.”
The company said the proceeds from the financing will be used to accelerate growth in its plant-based foods and beverages segment.
SunOpta’s stock on Thursday rose to an intraday high of $2.09, up 26 percent. The company’s shares have a 52-week trading range between $1.30 – its lowest level since 2009, and $4.72. SunOpta has a market cap of $177.6 million.
SunOpta also estimates the following ranges of performance for the first quarter:
- Revenue in a range of $320 to $340 million, compared with $305.3 million in the first quarter of 2019, or $295 million adjusted for disposed operations
- Net income (loss) attributable to common shareholders in a range of ($2.0) – $ 2.0 million, compared with $23.7 million in the first quarter of 2019. Net income in the first quarter of 2019 included a pre-tax gain on the sale of the specialty and organic soy and corn business of $45.6 million.
- Adjusted EBITDA in a range of $21 to $25 million, compared with $10.9 million in the first quarter of 2019, or $11.1 million adjusted for disposed operations.
- We attribute approximately $5 -$10 million of revenue growth and approximately ($.0.5) -$(1.5) million of Adjusted EBITDA to the impact of COVID-19. The positive margin impact of the revenue growth is being more than offset by an approximately $2.5 million unrealized loss on Mexican inventory revaluation as a result of the Peso devaluation.
“I am pleased to report that SunOpta expects to double adjusted EBITDA, excluding disposed operations, in the first quarter of 2020 versus the prior year. The adjusted EBITDA results reflect strong performance in all three of our business units. We continue to deliver very strong revenue growth and margin expansion in our plant-based beverages business unit, supported by sequential improvement in our fruit-based segment. Our Global Ingredients business unit is also seeing strong sequential improvement as we moved past the previously identified non-systemic headwinds from Q4. Overall, this continues the strong trend established in the fourth quarter of 2019, where the plant-based segment revenue grew by 25 percent and SunOpta doubled adjusted EBITDA,” said Joe Ennen, CEO at SunOpta.
Ennen continued, “To support attractive strategic growth investments in the plant-based food and beverage segment and to provide incremental corporate liquidity, we are also exploring a smaller debt financing package to supplement preferred equity financing. The total of these financing efforts could be up to $85 million in value. No assurances can be given that these financing efforts will be successful. We will provide an update at, or in advance of, our first quarter earnings release date.”